Projects should be accepted when the profitability index is less than 1.

Name: Projects should be accepted when the profitability index is less than 1.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A profitability index greater than 1 indicates that the project's present value of future cash flows exceeds its initial investment, suggesting it should be accepted. A profitability index less than 1 suggests the opposite, indicating the project may not be financially viable.

Projects Should Be Accepted When the Profitability Index Is Less